California State Tax Updates

• State and Local Tax Updates
• Tax Updates by City

For the latest news and updates on California state and local tax

May 2, 2020

Conformity to the CARES Act

The California Franchise Tax Board (FTB) provided some preliminary information regarding California’s conformity and nonconformity to the CARES Act. California generally conforms to the pension-related items of the Act, such as early withdrawal penalty and minimum distribution rule changes. However, California does not automatically adapt to the modifications made concerning loans from a qualified retirement account. California does not conform to other changes made by the CARES Act, including those related to loan forgiveness compared to the paycheck protection program. Furthermore, California does not conform to the provisions regarding net operating loss carrybacks, charitable contributions, student loan forgiveness, business interest limitations, and the prior year alternative minimum tax liability for corporations. The FTB will issue further guidance as it completes its analysis of the CARES Act.

Source: https://www.ftb.ca.gov/about-ftb/newsroom/tax-news/may-2020/californias-conformity-with-the-federal-cares-act.html

March 20, 2020

CA Filings and Deadlines Info

Specific info on type of filing and deadlines can be found on the State of California Franchise Tax Board site here.

CA Franchise Tax Board (“FTB”) Issues Relief Provisions for Taxpayers Amid COVID-19

This relief includes changes to the various tax filing and payment deadlines that occur on March 15, 2020, through June 15, 2020, to July 15, 2020. “This includes:

• Partnerships and LLCs who are taxed as partnerships whose tax returns are due on March 15 now have a 90-day extension to file and pay by June 15.
• Individual filers whose tax returns are due on April 15 now have a 60-day extension to file and pay by June 15.
• Quarterly estimated tax payments due on April 15 now have a 60-day extension to pay by June 15.”

Taxpayers claiming COVID-19 relief should write the name of the state of emergency (for example, COVID-19) in black ink at the top of their tax return to notify FTB of the extension period provided by the relief. If taxpayers are e-filing, they should follow the software instructions to enter disaster information.

In addition, the FTB will also waive interest and any late filing or late payment penalties that would normally apply.

More on Taxes and the Coronavirus Pandemic.

Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.

November 2019

Determining If a Taxpayer is Doing Business in California

The economic nexus thresholds for determining if a taxpayer is doing business in California for the 2019 taxable year were released by the California Franchise Tax Board. A taxpayer is considered to be doing business in California if it is organized or commercially domiciled in California; its sales in California exceed a threshold amount or 25% of its total sales; its real property and tangible personal property in California exceed a threshold amount or 25% of its total real property and tangible personal property; or the amount paid in California by the taxpayer for compensation exceeds a threshold amount or 25% of the total compensation paid by the taxpayer. The threshold values for the 2019 tax year are as follows: sales, $601,967; property, $60,197; and compensation, $60,197. (Memorandum on Indexing, Personal Income Tax Law, 2019 Tax Year, California Franchise Tax Board, 08/27/2019.)

Updates by City

City of Los Angeles

Aprl 2, 2020

Emergency Micro-Loans

The City of L.A. is offering emergency micro-loans between $5,000 and $50,000 to small businesses affected by the coronavirus. For micro-loan terms and eligibility, please click here: https://ewddlacity.com/index.php/microloan-program.

Source: https://laist.com/2020/03/23/where_to_get_financial_assistance_food_and_more_during_the_coronavirus.php

San Francisco

Aprl 2, 2020

Small Business Resiliency Fund

Due to the disruptions caused by COVID-19 to the small business community, the COVID-19 Small Business Resiliency Fund was created. It allows impacted small business owners to access up to $10,000 for employee salaries and rent. This program is administered in partnership with Northeast Community Federal Credit Union.

To be eligible for the COVID-19 Small Businesses Resiliency Fund, small businesses must:

1. Have at least 1 employee and no more than 5 employees
2. Demonstrate a loss of revenue of 25% or more
3. Have less than $2,500,000 in gross receipts
4. Be engaged in activities that are regulated by the City and County of San Francisco and have a license/permit associated to that regulation

Applications must be completed and submitted via email to investsf@sfgov.org or they can be mailed or delivered to:
Attn: Judy Lee – COVID 19 Small Business Resiliency Fund
1 Dr. Carlton B. Goodlett PL. Rm# 448
San Francisco, CA 94102

Please review the application for all needed documents to be submitted. In addition, the following will be required:

1. Proof of Payroll Costs
2. Proof of a 25% or more revenue loss

Source: https://oewd.org/covid-19-small-business-resiliency-fund